Which of the following is correct with regard to a holder in due course?

Question

Quizplus · Accepted Answer

A holder in due course can obtain greater rights to payment of an instrument than his transferor had. This means that the holder in due course takes the instrument free from most defenses that could be raised against the transferor. For example, if the transferor had received the instrument through fraud or breach of contract, the holder in due course would not be affected by those issues. Therefore, option C is correct. Option A is incorrect because a holder in due course is not primarily liable on an instrument. Option B is also incorrect because a holder in due course is not required to notify subsequent transferees of his status. Option D is incorrect because a holder in due course cannot give greater rights to a transferee than he has as a holder in due course.

Which of the Following Is Correct with Regard to a Holder